December 2019 E-Bulletin for Arbitrators

This month's E-Bulletin topics include:

  1. Revisions to AF Agreements
  2. AF to Reduce Fees in 2020
  3. Handling Liability Deductibles
  4. Is the TRS Case Outside of Jurisdiction?
  5. Disputed Damages and Rule 2-5 in TRS

Revisions to AF Agreements

Image of someone signing a piece of paperUpdates to Article Fifth and Sixth of the AF Agreements have been made to include arbitrator participation. These changes will become effective March 1, 2020.

Article Fifth – AF’s Function and Authority
  • (c) determine qualification criteria, provide for the selection and appointment of arbitrators, and establish arbitrator participation requirements for the signatory companies;
Article Sixth – Arbitrator Participation
  • Signatory companies agree to provide qualified arbitrators from among full-time employees, and hear as many cases as they file.
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AF to Reduce Fees in 2020

Image of wood blocks with letters that spell out the word feesArbitration Forums, Inc. (AF) is pleased to announce additional changes to our fee structure, providing our members with even more cost-effective services. In addition to a five dollar reduction to filing fees, AF will continue to provide the use of E-Subro Hub at no charge.

These changes will go into effect on January 1, 2020.

AF is dedicated to ensuring you, our members, are at the center of everything we do. We appreciate your continued participation in AF’s programs.
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Handling Liability Deductibles

Image of a car cut-out going into a piggy bankA gap has been identified in the hearing workflow, and the following steps must be taken until it is resolved.

When, after deciding liability and damages, the award amount falls within the proven liability deductible/self-insured retention amount, you must:

Select Modify Award.
Screenshot of the Award Summary section

Enter “$0” and a justification for the modification, and select Save Modifications.
Screenshot of the Award Summary section with save modifications highlighted
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Is the TRS Case Outside of Jurisdiction?

Image of a toy car on top of cashThere has been an uptick in Post-Decision Inquiries due to oversights regarding policy limits asserted by the Adverse Party.

We are sharing the following information to clarify the Policy Limits portion of a decision. In the example below, notice the area for “Known Exposures Proven in Current Decision” (see the first image). This is the amount sought by the Recovering Party. If limits were asserted, this area will reveal the net remaining limits balance based on the decision entered.

Please note the Adverse Party often has claims against its policy other than that of the Recovering Party. The area titled “Exposures Outside of Arbitration” (second image below) is for exposures not included in the arbitration filing.

When exposures outside of arbitration are asserted, they must be considered by the arbitrator. In the example below, a police report was furnished that included documentation of damage to the street light and to a parked vehicle (see the second image). These exposures, in addition to the amount sought by the Recovering Party, put the Adverse Party out of jurisdiction.  

Screenshot of the policy limit worksheet

Screenshot of the exposures outside of arbitration section

Screenshot showing to select yes
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Disputed Damages and Rule 2-5 in TRS

The Arbitration Forums, Inc. Rules (effective October 1, 2019) include updates that support TRS as the exclusive platform for Auto cases. 

Rule 2-5 specifies: “For new Auto filings, damages must be disputed where provided.” In TRS, “where provided” is the Feature Response workflow step.

We are sharing the following scenarios to offer guidance on applying Rule 2-5 in TRS.

Scenario 1 

The filer sought $7,020.64 in Auto Damage. The Responder disputed Auto Damage, entered the Proposed Amount of $6,422.23, and argued LKQ parts should have been used because the vehicle was six years old. 
Screenshot of a dispute justification

Did the Responder meet the terms of Rule 2-5 in TRS? 

Yes. The Responder disputed the correct Damage Type in the Feature Response, included its Proposed Amount, and presented its Justification regarding vehicle age and appropriate comparable parts. The difference between the amount sought and amount owed can be easily calculated. The fact that the Responder did not provide specific dollar amounts for each part should not preclude the dispute from being heard. Whether or not the reduction is proven will depend on the Responder’s evidence.
The help text for the Responder in TRS clarifies what is required: “Each itemized damage item can be disputed. Once the dispute option has been chosen, the damage item will expand, allowing you to enter the required information: Proposed Amount, the Justification, and the Dispute Type(s).” 
NOTE: If the Responder proves all of its reductions for parts costs, it might be sufficient to dispute parts with a single reduction (i.e., $300 total for three parts). However, if the arbitrator decides that the Responder proved only some of the parts reductions, and the Responder did not provide individual pricing, it may be appropriate to deny the damage dispute noting that a reduction could not be given because the Responder did not provide the necessary individual pricing to calculate the reduction accurately.   

Scenario 2
The filer submitted total loss damages, and partially itemized its damages by lumping the storage in with the salvage figure (see illustration). As a result, the Responder did not have the opportunity to choose Storage as a disputed item. With no alternative, the Responder disputed Valuation noting its storage challenge. 
Screenshot of company-paid damanges
Did the Responder meet the terms of Rule 2-5 in TRS? 

Yes. It is the responsibility of the filer to enter its damages accurately. The arbitrator has discretion whether to consider the amount the filer entered improperly as part of its subrogation claim. Per the current Reference Guide to Arbitration Forums, Inc. Agreements and Rules, “If the responding company disputes the damages claimed, it must clearly outline its position where provided, and note the amount that it feels is owed.” When the type of damage is not specifically named by the filer, the Responder does not have the opportunity to enter the dispute where it is provided in TRS, and the Responder is then allowed to raise the dispute in a different portion of its damage dispute. 

Scenario 3 

The filer sought $2,750.00 in Auto Damage and $300 in Rental. The Responder entered a challenge under the Auto Damage only as follows: “We challenge $250.00 of the Auto Damage as unrelated and $100.00 of the Rental as unnecessary.” The Rental area did not include a challenge by the Responder.
Screenshot of damages
Screenshot of a dispute justification

Did the Responder meet the terms of Rule 2-5 in TRS?

Yes and No. The challenge to the Auto Damage is acceptable, but the challenge to Rental is not. The disputed Rental should have been entered in the Rental field.

As a neutral evaluator, the arbitrator should approach each damage dispute by giving it every consideration possible. A dismissal of a damage dispute based on Rule 2-5 in TRS should be rare, because TRS has been designed to support the clear articulation of damage challenges, with the Proposed Amount field, the ability to dispute damages by item, and the ability to link/embed supporting evidence into the damage arguments.  
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